Wal-Mart fight heats up in California

San Diego
— Drop by just about any big city in the South, and you're likely to come across a Wal-Mart store. Or two. Or 10. But they're harder to find in California, and municipal leaders across the state want to keep it that way.

At particular issue in the Golden State: Wal-Mart's efforts to open "superstores" in cities both big and small.

Here in San Diego – which already has "regular" Wal-Marts – the City Council is expected to ban Wal-Mart "superstores" within city limits, a move that would override last week's mayoral veto. Urged on by unions, supermarkets, and small businesses, other cities and towns across the state are giving Wal-Mart a frostier reception than ever before. The California Supreme Court backed up such a stance earlier this month, saying that cities and counties can place restrictions on what sort of stores can open in their communities.

Elsewhere in the country, as Wal-Mart continues to move beyond its rural and Southern roots, Wal-Mart has recently faced challenges to its expansion plans in several cities – including Chicago; Tucson, Ariz.; and Spokane, Wash.

Is it the beginning of the end of Wal-Mart's astonishing growth? Its critics hope so. But even as some cities and towns pull away the welcome mat, Wal-Mart is both surviving and thriving.

Indeed, in California alone, Wal-Mart already has 27 "superstores" – many of them in cities, and with two opening just last week. The stores, typically about 185,000 square feet, feature full-size grocery stores.

Still, in some instances, Wal-Mart has clearly felt threatened, and several recent cases in California have shown it's willing to fight community opposition.

In Long Beach, the fifth-largest city in the state, Wal-Mart reportedly spent $270,000 on a successful petition drive to put a measure on the ballot in 2008 that would allow big retailers to sell groceries. City leaders banned such sales last year. The city currently has several "regular" Wal-Marts.

According to the Los Angeles Times, Wal-Mart spent another $300,000 to support two imperiled pro-Wal-Mart council members in the L.A. suburb of Rosemead.

In the northern California town of Turlock, a ban sparked a Wal-Mart appeal to the California Supreme Court, which in 2006 declined to take any action.

In perhaps the most striking brouhaha of all, the tiny Bay Area city of Hercules is wrapped up in a court battle as it tries to take over a plot of land by eminent domain to keep it out of Wal-Mart's hands.

And in San Diego, an expensive fight looms, despite the city's business-friendly reputation.

Wal-Mart is "just so darned convenient, and stuff's so cheap," says Kris Nelson, owner of Bluestocking Books, a small independent bookstore. "There's nothing wrong with that, but the problem is when we pay for our goods to be cheaper and from elsewhere, our local economy doesn't get anything back."

Wal-Mart also comes under fire because of its opposition to unionization efforts and its treatment of employees.

However, not every big retailer is seen as bad news. "There's a reason there's not a Target Watch," says Nu Wexler of the national watchdog group Wal-Mart Watch. In fact, a loophole in the proposed San Diego restrictions allows membership stores like Costco to open huge stores while Wal-Mart cannot.

For its part, Wal-Mart says it's been unfairly vilified. The company touts its pay (which it says is $10.68 an hour on average for full-time workers in the San Diego area) and its health benefits (which it says are better than those at local grocery chains).

And, of course, there are those famous discount prices. According to Milwaukee supermarket consultant David Livingston, Wal-Mart's grocery prices undercut their competition by 15 percent.

If the San Diego City Council overrides Mayor Jerry Sanders's veto, Wal-Mart is expected to challenge the ban by launching a petition drive to put the issue on the ballot. The fight over a ballot measure would be "nasty," predicts Mr. Alevy

Consumers, he says, should be able to choose a store for any reason, whether "it's located close to them, or it carries the brands they want, or they like the way it's set up, or they have good help, or, perish the thought, they have lower prices."

There is one recent indication that Wal-Mart is having struggles. According to reports, the chain announced last week that it will slow down the rollout of US superstores, opening 190 to 200 during the current fiscal year instead of 265 to 270.

However, "what their opponents sometimes fail to realize is that Wal-Mart is still growing at a significant pace every year," Mr. Livingston says. "If they get a little negative press, they could care less."